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India’s Gail Buys Cheniere’s Second LNG Cargo From Sabine Pass


Gail India Ltd. bought the second shipment of liquefied natural gas from Cheniere Energy Inc.’s Sabine Pass plant in Louisiana in a deal that makes it the first Asian importer of U.S. shale gas.

The nation’s biggest supplier will receive the cargo, bought on spot basis, at the Dabhol import terminal on the country’s west coast by mid-April, Vandana Chanana, a company spokeswoman, said Friday by e-mail. Cheniere’s office in London declined to comment, referring all questions to Houston. Faith Parker, a spokeswoman at Cheniere in Houston, didn’t respond to a voice mail left outside office hours.

The deal marks the beginning of U.S. LNG exports into the world’s biggest importing region of the super-chilled fuel, just as regional producers from Australia to Papua New Guinea ramp up supplies. India last year overtook South Korea as the world’s second biggest importer of the fuel on a spot and short-term basis as buyers took advantage of a slump in prices brought on by the crash in crude oil and an oversupply.

The delivered price of the cargo is about $5 per million British thermal units, according to two people with direct knowledge of the matter, who asked not to be identified because the information is private. Chanana declined to comment on commercial terms.

That’s higher than the $4.30 per million British thermal unit now paid by customers in northeast Asia for spot cargoes, according to assessments by the World Gas Intelligence publication. Prices crashed 78 percent from the peak in February 2014.
The price slump supported demand for spot cargoes in India. Imports rose 45 percent to 9.7 million tons in 2015, the biggest increase in spot and short-term traded volumes last year, according to the International Group of LNG importers annual report published this week.

Tanker Route
The Clean Ocean LNG tanker left Sabine Pass on March 15 after loading the second export cargo from the terminal. It’s sailing toward South Africa, according to ship-tracking data on Friday.
The first batch of LNG from the terminal was shipped to Brazil in February, marking the start of U.S. shale gas exports. The third cargo on the GasLog Salem is also set to go to Brazil, while destination of fourth shipment on the Energy Atlantic is still unclear, according to the ship-tracking data.

Cheniere Energy plans to ship as many as eight cargoes of LNG from its Sabine Pass project by May, the Houston-based company said in a February notice to the Federal Energy Regulatory Commission.
Cheniere’s initial exports are commissioning cargoes as part of the startup process to ensure the terminal is fully operational. Once that’s complete, Cheniere will need regulatory approval to operate the terminal commercially.

Gail India has agreed to buy 3.5 million metric tons of LNG a year for two decades from Sabine Pass. It has also booked 2.3 million tons a year capacity in the Cove Point LNG liquefaction terminal in Maryland. The shipments are expected to start in 2017 or 2018.
Gail will import around 6 million metric tons of gas from the U.S. from 2018, India’s Oil Minister Dharmendra Pradhan said in an interview in New Delhi on March 28.
Source: Bloomberg

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